HUNDREDS of thousands of families are missing out on free HMRC cash worth an average of £1,970 a year.
In fact, child benefit help worth a collective £1.65billion is expected to go unclaimed this financial year, according to analytics firm Policy in Practice.
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As of April 2024, child benefit is now worth £25.60 a week for the first child plus £16.95 a week for other children – up from £24 and £15.90 respectively.
It’s currently claimed by 7.7million families for more than 13.2million children.
However, the number of missed claims is estimated to have increased from 765,000 kids in the last financial year to 838,000 children this year, Policy in Practice has warned.
It comes as Chancellor Jeremy Hunt announced a change to the so-called high-income child benefit charge in the Spring Budget.
Read more on childcare
Up until April 6, this charge meant if either parent or carer earned over £50,000, they would have to start repaying some of the benefit.
And when one parent reached a £60,000 salary, they’d have to repay the full amount of child benefit received.
However, following the changes, these thresholds have been hiked to £60,000 and £80,000, respectively.
As a result, parents earning over £60,000 now repay the benefit at a rate of 1% for £200 of income over the threshold.
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It means half a million families with children will see an average of £1,260 extra paid out through child benefit.
And 170,000 families will no longer have to pay back child benefit at all.
Huge child benefit change to save thousands of parents from ‘unfair’ tax charge, Jeremy Hunt confirms
It’s up to parents to notify HMRC if they are liable for the charge and file a self-assessment tax return to pay it.
One million fewer families claim child benefit now compared to in 2012, just before the charge was introduced, according to HMRC figures published in April.
But by opting not to claim child benefit at all, those families could be missing out on National Insurance (NI) credits towards their state pension which could impact their retirement income.
Other upcoming changes to child benefit
The child benefit system has long been criticised as being unfair because one parent can earn only slightly over the threshold and start to lose payments – even if the other parent earns nothing at all.
Whereas two parents can both earn just under and still keep it, even though they may in effect have a much larger overall household income.
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For example, even under the current system, two parents earning £59,000 a year – totalling £118,000 in the household – receive the benefit in full.
But a household earning a lot less than that does not get the full payment if just one of the parents earns over £60,000.
At the Spring Budget, Mr Hunt promised to look into changing the system so that households are assessed by overall income.
It is hoped these changes could take effect in 2026, but an exact timeline hasn’t been announced.
Who is eligible for child benefit?
You will normally qualify for child benefit if you live in the UK and you’re responsible for a child under 16.
The support can also be claimed for a child under 20 if they stay in approved education or training.
But when two or more people share caring responsibilities for a child, it can only be claimed by one person.
To be considered responsible for a child, you will live with them or pay at least the same amount as child benefit rates to look after them – for example, for food, clothes or pocket money.
It’s important to note that eligibility changes if a child goes into hospital or care, or if your child starts to live with someone else.
You’ll usually get child benefit for eight weeks after your child goes to live with a friend or relative – as long as they don’t make a claim.
But it can continue for longer if you make contributions towards your child’s upkeep.
If both parties claim and cannot agree, then HMRC will decide who receives the child benefit.
Foster parents can also claim child benefit as long as the local council is not paying anything towards their accommodation or maintenance.
Legal guardians or parents who are adopting a child can also apply for help as soon as the child comes to live with them.
If you leave the UK, you’ll only be able to claim for a short period of time, for example on holiday or for medical treatment.
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If you’re not sure about your eligibility you can contact the Child Benefit office.
Last May, Martin Lewis also urged 750,000 eligible families to apply for child benefit.
How to apply for child benefit
YOU can make a claim for child benefit 48 hours after you’ve registered the birth of your child, or once they move in with you.
It can be backdated by up to three months if you don’t claim it straight away.
Applying is straightforward and can be done in minutes at gov.uk or through the HMRC app.
Parents with a newborn baby should make a claim online as soon as possible and could then receive their first payment in as little as three days.
You can make a claim and then choose to opt out of receiving child benefit payments to still get National Insurance credits if one parent is not working.
National Insurance credits build up your entitlement to the state pension.
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